Protecting Your Heirs: Stretch IRA

It is relatively easy for a spouse to inherit an individual retirement account (IRA) or other tax-deferred monies.  In such situations, surviving spouses can assume the account under their name or they can roll it over into an existing IRA.  But if you want someone else to inherit your IRA funds (an adult child, a grandchild or a friend), those beneficiaries will pay a large chunk to the IRS — possibly as much as 70% of your estate!

In 2001, when the IRS changed complex IRA withdrawal rules, the Stretch IRA was created to ease the transition from one generation to the next.  The Stretch IRA provides you with the opportunity to keep your money growing tax deferred — not only during your lifetime, but also over the lifetimes of future generations!

Even though the IRS allows for Stretch IRAs, many financial institutions don’t offer this service.  We provide this service to you at no cost.  Let us help you decide if the Stretch IRA is right for you!

Witness the Magic of Tax Deferral and Compounding

A Stretch IRA balance of $200,000 invested over three generations and earning an average rate of 8% will result in a payout close to $5 million!

Individual Retirement Plans

  • IRA’s – are funded entirely by individual contributions. If you qualify these contributions may be tax deductible. Earnings and pre-tax contributions are subject to taxes when withdrawn. Distributions before 59 ½ may also be subject to a 10% penalty.
  • Roth IRA – an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free.
  • Annuity contracts – function similarly to qualified accounts in that they provide tax-deferred growth and are subject to withdrawal conditions. But they are not qualified retirement plans, contributions are not tax deductible and there are no contribution limits.
  • Keogh Plans – are for self employed people and are funded by their income. Potential earnings accumulate on a taxed-deferred basis.